What Is Company Van Benefit?

What Is Company Van Benefit?

We explain how Company Van Benefit works

When the private use of a company van with a weight less than 3.5tonnes is provided to an employee the annual taxable benefit is a fixed amount.

The fixed amount is £3,960 for 2024/2025 tax year

Similarly, if free fuel is provided for private motoring in the van then a fixed taxable benefit of £757 applies for 2024/2025 tax year

The only exception to the private use benefit is if a site-based driver is required to take a van home each night in order to travel straight to a job site the next morning.

Private Use Contributions

If a company van driver is required to make a financial contribution as a condition of the van being available for private motoring, the contribution will normally reduce the annual taxable benefit of the van.

Each £1 paid during the tax year as a private use contribution reduces the annual taxable benefit by £1.

For example, let’s assume a driver pays £50 per month as a private use contribution (i.e. £600pa).

The £3,960 benefit is then reduced for the £600pa private use contribution, which makes the annual company van benefit £3,360pa.

The maximum tax-deductible private use contribution in any tax year is equal to the taxable benefit of the company van.

A negative taxable benefit (and therefore a tax refund) cannot be created by making a private use contribution greater than the annual benefit of the van.

Capital Contributions

Unlike company cars, if a company van driver makes a capital contribution towards the price of the van this has no effect on the van benefit.

Zero Emissions Vans

For 2020/21 tax year, if a company van driver has the private use of a van with zero CO2 emissions then the taxable benefit is reduced to 80% of the normal fixed annual benefit (£3,490 x 80% = £2,782 for 2020/21 tax year).

For 2021/22 tax year (starting 6 April 2021) and subsequent tax years the percentage benefit for zero CO2 emissions vans is reduced to zero, so there's no taxable benefit.

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